I’m not gonna lie. Being a startup founder is stressful. And…
One of the biggest stresses of startup life is growth envy.
As a startup founder, if you want to feel bad about yourself and your progress, jump on over to TechCrunch and read articles like “Who Is In the New Billion Dollar Valuation Club?”
Look at Dropbox. Look at AirBNB. These companies are not 10 years old. They are only a few. A billion dollars? In just a few years? That is amazing.
Earbits needs to do that.
Nope. It’s never enough.
I worked at a startup that was started with $20,000 and exited in the mid-teen millions. It took about 6 years. The founders, who never had to answer to anybody and would never have to work again (except that they want to), look at other exits in the space and sometimes say they could’ve done better, could have been more aggressive.
Of course you can do better. You can always do better.
One thing is certain – it doesn’t matter what your outcome is, you can always have growth envy. It’s especially easy to have growth envy while you’re in the midst of building your company. After all, everybody you read about is blowing up.
…everyone you read about, that is.
One reason why having growth envy is unnecessary.
Paul Graham wrote a great essay about the things that most startups he funded were surprised by while building their companies. He wanted to know what he needed to be telling his startups that he hadn’t been.
The truth is, the things they said they were surprised by weren’t things he didn’t tell them, they were just things they didn’t think would apply to them. Everyone thinks that they’re going to be special, different – and some people are. One out of 100 successful companies, according to Graham, will be like Facebook. That means there are 99 successful companies who agonized over growth – who grew one customer at a time, who wished they knew why things were taking so long. Most of them thought they’d be in the 1 out of 100 group, and when you consider how many businesses don’t survive at all, they’re really in the 1 out of 1000+ club.
You only read about the 1 out of 100, or maybe the top 10. That means that you could be in an elite group of 90% of companies who create success and be feeling pretty bad every time you read TechCrunch. But you shouldn’t.
“That’s a big growth. Better get that checked out.” Reason number two not to have growth envy.
There is a saying in the music “business”. Or, at least, there is something that every strict parent tells their artistic kid.
“If you don’t make a living from it, it’s not a job, it’s a hobby.”
When I look at the Billion Dollar Valuation Club, I see Groupon, Pandora, and FourSquare. It would be easy to have growth envy – these are billion dollar businesses with millions of users and hundreds or thousands of employees.
But there is another old saying in music:
“Know how to make a million dollars playing jazz? Start with two million.”
No offense to these tremendous organizations built by very smart people, but when the company with the highest valuation on that list (Groupon) is also the one with the most debt, dumping the most of their investors’ money every month, should I really be envious of their growth? Give me a billion dollars and watch how fast I can get customers. Sure, the founders took a lot of money off the table and will never have to work again – but did they build a real company? Time will tell.
I feel bad saying anything negative about Pandora because I really, really love their product – but after ten years and millions of dollars spent, they’ll be lucky to make a single dollar in profit this year, or any year for that matter. Admittedly, I am more envious of their company than the others, but if Pandora had parents they would have told them to stop horsing around and get a job by now.
DJ Ouch on the Ones and Twos
No doubt – there is a new, sexy girl in the room – Turntable.fm. Man, did she walk in with a short skirt on. 140,000 users in one month.
It would be easy to be jealous, after all, they’re a new music startup getting lots of attention and growing fast. It would be super easy to have growth envy and, for a moment, I did. I mean, I’m very, very excited about Earbits’s growth, but needless to say those weren’t our first month figures.
But as Digital Music News pointed out earlier – they’re having their share of retention issues, already cutting off access outside of the US, and more. And how they plan to out-do Pandora’s performance in monetization has yet to be talked about.
I did some napkin math a couple days ago. I think their royalties are adding up at like $0.02 for every song they play in a room with one DJ and 10 people. That’s $0.01 for the on-demand play by the DJ, and $0.001 for each random spin the 10 audience members are getting. I could be off, but let’s divide their 140,000 users by 11 (12,727). Let’s say each group of 11 who came to their site listened to 6 songs ($0.12). That might be high, might be low. What it comes out to is just over $1,500 in royalties. Double that next month, and you have just hired your first $36k per year employee – or not hired them, I mean.
I’m not gonna lie. Being a startup founder is stressful. It’s easy to compare your progress to other people and wish you had their growth…
…and yet, not wish that you had their business.
Paying Homage to the 99 out of 100
I would like to quickly pay homage to some Los Angeles companies that serve as counters to the TechCrunch elite. If you’re a startup founder (or a founder of anything and feeling like you wish you had those 1 in a million results), there are plenty of companies with great results, big profits, and no glamour – companies like GreenDot, ReachLocal, LowerMyBills, Affiliate Fuel, PriceGrabber, Commission Junction, eHarmony, FastClick, and many more.
They may not all be in the Billion Dollar Valuation Club (I think GreenDot might be) – but I can tell you right now, I’d rather have their dividends.
Written while listening to Moe.
–
Joey Flores
CEO, earbits.com
joey@earbits.com
Listen at www.earbits.com
Connect with us on Facebook: www.facebook.com/earbits
Listen on iPhone: itunes.apple.com/us/app/earbits-radio/id397894402
Twitter: @earbits
